Using New Outlook on Windows for academic communication and scheduling
Yes, I'm having the same issue. I also know why it's happening. It's a bug that should have been caught pre-release in Microsoft's QA/Testing.
I was just about to check what version of so-called "New Outlook" I am on this time so i could quote it in this reply, but I've just discovered that Microsoft appear to have hidden the "About" menu item, meaning I can no longer easily tell you what release version I'm using. The "About" menu item is a piece of computing history so extraordinarily ubiquitous that, no exaggeration, several billion people on the planet Earth would know exactly what you meant and where to find it in moments. Even my mother could find the "About" menu. Except... now she can't. And neither can I. So I'm going to pause for a few seconds to quietly fume and attempt to compose myself before my hitherto unnecessary wild goose chase into Settings > Apps > Installed Apps -> Outlook (New) -> Advanced Options.....
OK, so I'm on Outlook (new) version 1.2024.207.500. Right. Let's crack on with my explanation of the ongoing farce that is Microsoft's inability to develop software in any fashion other than haphazard and slap-dash:
First thing to say is. Microsoft's approach to implementing the ability to add an account of type "IMAP" is one of "programming by trial and error" (let's call this proprietary development approach as PBTAE for short). When the developers/engineers/programmers/cloud engineers/devops engineers/scrum masters/product owners and so on, when they all convene at a kickoff meeting at the beginning of the project to build this dialogue box, they decide that they don't like their Quality Analysts' hair/accent/flared trousers/bad breath (delete as applicable) and collectively decide to ostracise the QA for the entirety of the project
OK OK OK look I'll get to the point. My error message is almost the same, it says "INVALIDCREDENTIALS INTERACTIONREQUIRED" (i,e. no spaces). Your password is not wrong. My password is not wrong. But I bet that you tried to configure this with the recommended "SSL / TLS Secure Connection Type" settings? Rather than "None" (i.e. the "hack-me" plain text over internet)? Of course you did. You seem like a switched on kind of dude. You're security conscious. A man of the world.
(I can't help but point out at this moment that I hope you're not using SSL, as that protocol was deemed insecure and deprecated almost 10 years ago)
Anyways.... Problem is that in the background the actual response from the IMAP server is something like "The server you are connected to is using a security certificate that cannot be verified” or suchlike. The IMAP server is then waiting for you to decide if you want to continue and it's expecting a text response Y or N from you , and that response never comes because it can't. Because it wasn't you that made the original request, so you pressing Y or N will make diddly-squat difference. It's waiting for Outlook to "press Y or N" for you. And Outlook can't do that, because the developers who wrote the code didn't expect that manual input as they weren't familiar with how encrypted email works, and therefore that scenario was never tested. So there.
Now we just need to get someone to fix it
Did you try reporting it as a bug?